I may be a doctor, but I too hate needles. On those grounds alone, I was initially pulling for Elizabeth Holmes to succeed when I first heard about her startup, Theranos. The company promised to eliminate painful blood draws from the veins in our elbows and hands thanks to its new technology, which could get the same information from a tiny prick of blood taken from the finger. But I soon suspected that the product might be a fraud and the reason was simple: There was never any published scientific literature to support the claims the company made. No physicians or biomedical scientists had ever laid eyes on a paper that described any breakthrough with any demonstrated capacity to accomplish what the company said it could do. Time and again, the company instead hid behind the same smokescreen: Theranos wouldn’t reveal how its technology worked, or why it was experiencing delays, because it didn’t want to reveal its “trade secrets.”
That rationale simply doesn’t cut it in the biomedical sciences, and frankly, it never has. Consider, for comparison’s sake, the history of Genentech, maker of synthetic insulin and other useful medicines. By the time it went public in 1980 (which the Wall Street Journal called “one of the spectacular market debuts in recent history”), Herbert Boyer and Stanley Cohen (along with Annie Chang and Robert Helling) had not only cut a gene from one bacterium and pasted it into another AND demonstrated proof that they could use their astonishing chimera to produce useful biological products; they had also published the recipe in a major scientific journal telling everyone exactly how they did it. You can even read Cohen’s old handwritten lab notes, if you’re interested. Genentech didn’t get its edge by guarding its methodology behind veils of secrecy—it succeeded thanks to its excellence at inexpensively obtaining the necessary supplies, hiring the right people to optimize the process, and making its work scalable for production. It’s been churning out massive quantities of its products ever since.
Theranos ostensibly produced a laboratory tool rather than an FDA-approved medical treatments, but that doesn’t render the “trade secret” argument valid either. The German corporation Carl Zeiss, for example, generates billions of dollars in revenue every year producing microscopes, but it isn’t as if the average optical physicist can’t tell you pretty much exactly how they work. Long-term economic success again has more to do with excelling at logistics than creating unique technology.
How then, did Theranos fool so many for so long? The commonly proffered explanation—that Elizabeth Holmes’ compelling ability as a “storyteller” was so virtuosic that everyone was taken in—is completely inadequate if we are to learn anything from this, well, hemorrhage. It’s tempting to chalk this debacle up to the supposed authenticity of her one Ted talk (here’s what’s left of it; the full talk disappeared off of the Ted talks website, and seemingly the internet at large, last week), her self-styled Steve Jobs epigonism, her family’s connection to deep pockets that provided the seed money, and her ability to convince otherwise prestigious luminaries from various other professional disciplines (mainly without medical or scientific expertise, it has been recently noted) that she would make them all even richer. But doing so ignores that these are all merely symptoms of the root of the real problem; a disease which, if we are not vigilant, can and will strike biotechnology and venture-capital again: From the start, Theranos was not marketed to the media and investors as biomedical science company. It was peddled as a Silicon Valley technology startup with the appetizing gimmick that it would “disrupt” the health care model, allowing it to play by a different set of rules than those applied to biomedical or pharmaceutical businesses. That’s why the company got away with what it did for so long, and this is what we need to be wary of in the future.
The intellectual destituteness of the entire exercise seems obvious now, but let’s revisit it briefly. Theranos was overseen by a board of successful white male saps, including such eminent names as Henry Kissinger, George Shultz, James Mattis, Bill Frist (a former surgeon, prior to his days in the Senate). It now offers a case study in groupthink and why diversity in leadership matters, since none of these men, it seems, ever broke ranks to ask the tough question of “how does this actually work.” Neither, it seems, did the venture capitalists who invested in it, or many of the journalists who covered it. Perhaps that’s because Theranos’ promised “disruptive” potential was covered not by science and medicine reporters, but by Silicon Valley technology reporters. Last week, Fortune’s Roger Parloff bravely owned up to getting full-hoodwinked by Holmes. In his refreshingly forthright essay, Parloff acknowledges that as tech reporter without a science background (or the good sense to ask anyone qualified), he was in over his head. Even though he was on the right track with some of his questions, he ultimately got pump-faked by standard-issue marketing nonsense that sounds vaguely authoritative, but is, on second glance, purified drivel.
The Wall Street Journal’s John Carreyrou did figure out how to ask those tough questions, and in doing so he became the hero who tipped the whole thing over, also generating some of best investigative reporting in the history of Silicon Valley. But where, I’ve long wondered, were the science and medicine reporters during this whole debacle? Holmes and her team of scientists never seemed to get much attention from, say, Scientific American, let alone serious peer-review journals like Science, Nature, or the Lancet (not at least, until the fraud was exposed). Meanwhile, coverage in Forbes, Fortune, and yes, even Slate, focused on Holmes herself, a superstar CEO. Articles appearing in Glamour, Mother Jones, Business Insider, and CNBC extolled her status as a self-made billionaire, trumpeted her supposed leadership skills, and in general fueled a media-driven bacchanale celebrating Holmes as an inspirational icon for young entrepreneurs, a “rebel” with a cause, who everyone was pulling for.
Not only did the basic questions get ignored; no one was pressing on the more complicated ones, either. Ironically, the only thing worse than Holmes’ assurances and promises having been found to have been fraudulent would have been if they were actually true. If “microfluidics” could really mine scores of information from tiny amounts of blood, that ought to have bought up the classic quandary posed by that paragon of scientific ethics, Dr. Ian Malcolm of the Jurassic Park series. As Jeff Goldblum’s character famously noted, the park’s scientists were “so preoccupied with whether they could, they didn’t stop to think if they should.” So too with Theranos.
The problem is that even if a drop of blood could be used to garner troves of medical information about ourselves, the likely outcome of this would not be better preventative medicine but rather overdiagnosis and overtreatment. Patients would likely have started getting treated for problems they didn’t truly have with medicines they did not need and which can, in fact, do them harm (this explanation in FiveThirtyEight provides an excellent rundown of why over-testing asymptomatic people is a problem, as does the fascinating book “Overdiagnosed: Making People Sick in the Pursuit of Health”). Further, patients gaining the ability to order blood tests without a physician’s orders sound liberating at first, but at a minimum, it would have created havoc: Lab results are rarely yes/no scenarios, which is why physicians have to interpret them in their proper clinical context. Plus, allowing anyone to order any blood test they wanted without professional guidance could have posed substantial privacy threats. What would stop a potential employer from adding a few tests, say an HIV test, to your drug screen, for example?
Luckily, we don’t have to worry about this because, as we know, Theranos’ super-secret technology doesn’t actually work. After years of saying otherwise, Elizabeth Holmes and Theranos President Sunny Balwani face charges of “massive fraud,” but will walk away with a paltry slap on the wrist from the U.S. Securities and Exchange Commission: a $500,000 fine and a 10-year ban from working with Theranos. The fine is minimal compared to the hundreds of millions of dollars Holmes and her posse enriched themselves with over the past several years. And while Forbes reckons Holmes’s net worth fell from $4.5 billion to approximately zero dollars in 2016, that should not be considered a punishment—it’s just what happens when a CEO’s bluster turns out to be based on nothing but hype.
A small fine for perpetuating massive fraud? No jail? No wealthy entrepreneur looking to cut a few corners on the way to amassing a fortune by fraudulent means would ever be deterred by this deal. If people like Holmes and Balwani were imprisoned or forced to sell their homes in the face of “massive fraud,” maybe that would force other fancy con artists to give their scams more serious thought before the sold them to the public. As it is, the punishment stands as just one more way Theranos managed to profit off of its Silicon Valley image. By connecting itself to a world that fetishizes failure as the price of trying, Theranos is still reaping rewards from convincing us to let it play under a different set of rules.
Disclaimer: The opinions expressed in this article are solely those of the author and do not reflect the views and opinions of Brigham and Women’s Hospital.